Trouble with cross forest trust

I have a frustrating issue I was hoping to get some help on.

The company I started working for has a cross forest trust in place. Domain1 and Domain2. It is a two-way non-transitive trust. Both domains are at a 2003 functional level. Domain1 has 4 name servers, 2 are 2003 and 2 are 2008R2. Domain2 has 2 name servers and both are 2003.

Domain1 is configured with conditional forwarders to domain2, and domain2 has forwarders for domain1.

The problem that we are having is that users in domain2 cannot access shares in domain1. When I go to the properties for the share on domain1\server, go to the security tab, add and then try to do an advanced find on domain2 i get "The following error prevented the display of any items: The specified domain either does not exist or could not be contacted."

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Using the Windows interface
1.Open Active Directory Domains and Trusts.
2.In the console tree, right-click the domain that contains the trust you want to verify, and then click Properties.
3.On the Trusts tab, under either Domains trusted by this domain (outgoing trusts) or Domains that trust this domain (incoming trusts), click the trust to be verified, and then click Properties.
4.Click Validate.
5.Do one of the following, and then click OK:
Click No, do not validate the incoming trust.
If you choose this option, it is recommended that you repeat this procedure for the reciprocal domain.
Click Yes, validate the incoming trust.
If you choose this option, you must type a user account and password with administrative credentials for the reciprocal domain.

From Domain2 (Server 2003 DC) I can validate the trust, but from Domain1 I receive the error, "Windows cannot find an Active Directory Domain Controller for the "Domain2" domain. Verify that an AD DC is available and then try again." when trying to validate from a 2008 DC, but the trust validates from a 2003 DC in the same domain.

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I can ping all DC's in both domains. If I am going to ping a DC in the remote domain I have to ping using FQDN (server1.domain2.local). Yes the credential I am using is both domain and enterprise admin groups.